Confidentiality agreement is used by two companies at the commencement of new work therefore it should be in standard written form. It is important to bind all parties to conceal sensitive information from outsiders. Confidentially contract is a clear indication that the information is private and only for the contract parties. This type of contracts are used as incentives to build trust between parties and often used for legal battle. Confidentiality agreement is also known as non-disclosure agreement and these types of contracts are often used by employer to prohibit employees to disclose confidential details to general public and other people. Confidentiality contracts are necessary to guard confidential information and trade secrets.
Nature of Confidentiality Contract
Confidentiality contracts are legal binding therefore these should be designed in written form. It is also known as a binding contract as it serves as guarantee for the protection of your confidential information and business secretes.
Functions of Confidentiality Contract
Confidentiality contracts are designed for the protection of private information from public. These contracts often comprise details of secretes or information that should not be disclosed in the public by the parties of contract. Usually, employer takes sign of employee on confidentiality agreement to bind him/her for the secrecy. Usually this contract has three major functions:
- Protection of sensitive information related to your business or project.
- Prevent forfeiture of patent rights.
- Clear definition of confidential information that is necessary to conceal from other people.
Here is preview of a free Sample Confidentiality Contract Template created using MS Word,
Things to be Written
Following are some important points that should be included in the confidentiality contracts:
Confidentiality contract should specify the details of parties entering in the contract and the ways to handle confidential information. The contract should contain time period for which parties are bound not to disclose confidential information to third person or general public.
This contract can be long and wordy and often contain complex legal jargon. You are advised to consult your legal adviser before signing these contracts to understand complex legal jargons.
If confidentiality contract is written for employee then the contract will include employment terms, duties, restrictions, termination policies and non-solicitation agreement. For instance, while hiring a sales person the contract will state that the person is not allowed to work for the competitor of specific area for specific period of time even after quitting his/her job.
External contract agreements are made between contractors, consultants, potential employee and vendors. These contracts cover secrete information of the company according to the license and the business policies.
Significance of Confidentiality Contract
Confidentiality agreement is a legal contract that requires two or more than two parties to enter. It is important document for the protection of your secrete information therefore it is essential to take the consent of all parties before writing such contracts. After signing this contract, all parties become responsible to protect private information of the company or project. Nature of information can be varied for the contract such as data, drawings, results of a test, facts of computer software, business tools etc.